{
  "id": "RL32637",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL32637",
  "active": false,
  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 314725,
      "date": "2006-05-05",
      "retrieved": "2016-04-07T19:03:27.725029",
      "title": "Argentina's Sovereign Debt Restructuring",
      "summary": "In December 2001, after four years of deepening recession, impending financial crisis, and\nmounting\nsocial unrest, Argentina's government suddenly collapsed and ceased all payments on its debt. \nArgentina has failed to pay before, but this time it registered the largest sovereign default in history. \nTotal public debt grew from 62% of GDP in late 2001 to a record-breaking and unsustainable 164%\nfollowing default and devaluation in early 2002. Argentina faced restructuring over $100 billion of\ndebt owed to domestic and international bondholders, including $10-15 billion of bonds held by U.S.\ninvestors. After an extended and contentious \"negotiation\" period, Argentina exchanged new bonds\nfor the old on June 2, 2005. The results were unprecedented, with the offer garnering a 76%\nparticipation rate (far below the more standard 90%) and paying only 26%-30% of the debt's net\npresent value to most bondholders (nearly half the historical minimum of 50%).\n Sovereign defaults are typically worked out in what amounts to a consensual understanding\nbetween creditors and debtors, with the assistance of the IMF in setting macroeconomic targets that\nform the basis for a mutual understanding of a country's ability to repay. In this case, Argentina\nargued that its debt was simply too big to repay and rebuffed both private creditors, and at times, the\nIMF, even \"suspending\" its agreement at one point.\n In the end, a mutually agreeable resolution failed to materialize, leading to a default that was\nnot only unprecedented for its lengthy resolution (over three years), low recovery rate (30% of NPV),\nand large residual holdout (24% of creditors), but for the process that stretched (creditors would say\nflaunted) the guidelines of sovereign debt negotiations. This applied to both informal negotiation\nguidelines understood to be in play by bondholders, and a more formal understanding as embodied\nin the IMF's policy of lending into private arrears. Other countries may look to Argentina as a model\nfor reneging on sovereign debt, but the cost of Argentina's financial collapse in long-term social and\neconomic terms has been devastating. For investment firms and individual holders of Argentina's\ndebt, the huge loss taken on the default is also a highly negative precedent.\n Since the debt restructuring, Argentina has repaid the $9.8 billion it owed the International\nMonetary Fund (IMF) and seeks to normalize relations with the private international financial\nmarkets. Still, there is outstanding litigation against Argentina by the 24% of bondholders who\nrefused to accept the restructuring, and re-engaging the international capital markets has had only\nlimited success. Litigants' lack of success when faced with a determined defaulting country has\nalready led to the adoption of collective action clauses as standard provisions in emerging market\ndebt and the Argentine default will continue to have widespread implications not only for creditors,\nbut for Argentina's long-term financial sustainability, developing country debt markets, guidelines\nfor future sovereign debt restructurings, and IMF policies. In support of U.S. congressional interest\nin developing country financial crises, this report analyzes Argentina's debt restructuring. It will not\nbe updated.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
      "formats": [
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          "format": "PDF",
          "encoding": null,
          "url": "http://www.crs.gov/Reports/pdf/RL32637",
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          "format": "HTML",
          "filename": "files/20060505_RL32637_19b1c14a35c449db0214b07397a4f61703a8a350.html"
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      "topics": []
    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metacrs5743/",
      "id": "RL32637 2004-10-19",
      "date": "2004-10-19",
      "retrieved": "2005-06-10T20:39:18",
      "title": "Argentina's Sovereign Debt Restructuring",
      "summary": "The U.S. Congress has held numerous hearings to evaluate the causes and ongoing repercussions of Argentina\u2019s financial crisis. This report analyzes Argentina\u2019s debt situation in support of this interest and will be updated periodically.",
      "type": "CRS Report",
      "typeId": "REPORT",
      "active": false,
      "formats": [
        {
          "format": "PDF",
          "filename": "files/20041019_RL32637_f61232f5ceb2098a2108a2f1dcc86ddd0187cb0d.pdf"
        },
        {
          "format": "HTML",
          "filename": "files/20041019_RL32637_f61232f5ceb2098a2108a2f1dcc86ddd0187cb0d.html"
        }
      ],
      "topics": [
        {
          "source": "LIV",
          "id": "Budgets",
          "name": "Budgets"
        },
        {
          "source": "LIV",
          "id": "Economic conditions - Argentina",
          "name": "Economic conditions - Argentina"
        },
        {
          "source": "LIV",
          "id": "Public debt - Argentina",
          "name": "Public debt - Argentina"
        },
        {
          "source": "LIV",
          "id": "Economic policy",
          "name": "Economic policy"
        }
      ]
    }
  ],
  "topics": [
    "American Law",
    "Economic Policy",
    "Foreign Affairs",
    "Industry and Trade"
  ]
}